Pieces on Hess Chess Board in Play

Oil company, activist investor offer up plans for hybrid board with nominees from both slates

May 14, 2013

NEW YORK -- It is now Hess Corp.'s move in its chess game with investor Elliott Management Corp. over its board of directors, heading into the annual meeting on May 16 after an
series of contentious press releases and letters to shareholders, offset by a series of concessions that could indicate the parties are moving toward a compromise.

In the latest exchange of proposals, the two parties are putting proposals on the table for the creation of a board that contains nominees from both slates.

"Some of our other shareholders have also discussed with us the possibility of adding certain of Elliott's nominees to the board, if they are willing to serve, along with Hess' five new, independent nominees," Hess said. "Now that Elliott's nominees have waived their rights to Elliott's troubling compensation scheme, we are ready to be responsive to that request. Consistent with our commitment to refresh the majority of our Board by the end of 2013, we are prepared to add two Elliott nominees whom we would choose in consultation with shareholders. We would effect this change promptly after annual meeting if all five of Hess' new, independent nominees are elected. We believe this proposed resolution will allow us to continue executing our plan and focus on the task at hand--creating superior value for all of Hess' shareholders."

Elliott Management responded, "Shareholders want real change, yet Hess is doing everything they can to avoid it. Today's press release from Hess is more of the same. Without ever talking with Elliott and seeing the writing on the wall, Hess engaged in a PR stunt and proposed accepting only two nominees. If Hess were serious, they would have engaged in substantive conversation with Elliott rather than blast out desperate press releases.

"The consistent message from Shareholders is that they want substantial change in the boardroom of Hess. Hess should accept all five Shareholder nominees and replace as many of their incumbent directors with management's nominees as is reasonable. We continue to welcome constructive dialogue with Hess."

As reported in a Raymond James/CSP Daily News Flash on Tuesday, although Elliott Management rejected Hess's offer of the two seats, the investor is now proposing a composite board of all current nominees.

"Consistent with Hess's promise to refresh the board, Elliott proposes that all shareholder nominees and all management nominees step onto a reconstituted board--the size and composition to be agreed upon. Shareholders want real change and a renewed board. Hess has promised such renewal and this solution will follow through on that promise. The shareholder nominees look forward to working with the reconstituted board to restore accountability and investor confidence that will maximize value for all Hess shareholders."

Hess has yet to respond to the proposal.

On Monday, Elliott Management announced that its Hess board nominees would give up compensation under a plan that Hess criticized.

Last week, Hess announced that it would separate the role of chairman and chief executive officer immediately following its annual meeting on May 16 in Houston.

Elliott Management has been calling for change at Hess since January, when it launched a campaign to seat five new directors on the board and pitched a plan to reevaluate the company's strategy and possibly break up the company. Hess has since announced plans to exit its retail gasoline, marketing and trading businesses, and assembled its own slate of six new directors for its board.

Hess, New York, is a leading global independent energy company primarily engaged in the exploration and production of crude oil and natural gas and the marketing of refined petroleum products, natural gas and electricity. Hess is a major independent gasoline-convenience store retailers on the East Coast with more than 1,350 retail outlets in 16 East Coast states.

Plunge in oil prices sets the stage for record margins and boost in in-store sales. Also In This Issue: Profitability skyrockets for top performers! Other channels seek to redefine convenience! The economy enters a new stage. The growing health-and-wellness trend. Fuel demand; oil's slide; multicultural momentum; and data, data, data!

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